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Levart [38]
3 years ago
13

A project has an initial cost of $40,000, expected net cash inflows of $8,000 per year for 11 years, and a cost of capital of 10

%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to the nearest cent.
Business
1 answer:
bogdanovich [222]3 years ago
4 0

Answer:

the net present value is $11,961

Explanation:

The computation of the project NPV is as follows;

The net present value is

= Present value of cash inflows - initial investment

= $8,000 × PVIFA factor for 11 years at 10% - $40,000

= $8,000 × 6.4951 - $40,000

= $51,961 - $40,000

= $11,961

Hence, the net present value is $11,961

The same is to be considered

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